No merger, no NC, but Jobs signals new direction

So there was no merger with Oracle - or anybody else for that matter. There was no MacOS network computer, either - although that is most surely coming. But what interim CEO Steve Jobs did announce at Apple's much-ballyhooed press conference last Monday was plenty for his staff to be chewing on. Is Apple really ready to do a Dell?

So there was no merger with Oracle -— or anybody else for that matter. There was no MacOS network computer, either — although that is most surely coming. But what interim CEO Steve Jobs did announce at Apple’s much-ballyhooed press conference last Monday was plenty for his staff to be chewing on.

Jobs has been known to have a regard for Dell Computer bordering on infatuation, and the new announcement sees Apple follow the Dell model — direct-sell, online store, build-to-order. Jobs even hinted that Apple might seek to better Dell at its own game. But the fact that Apple will also continue to sell all its core products, via retail and its existing reseller channel, is but one of the tricky parts of its new path.

Although Apple has made vast improvements in its control of manufacturing, quality and inventory in the past two years, flipping over to to Dell’s hard-won model will not be easy. It will require a radical change in manufacturing processes. Has there really been time for Apple to so thoroughly reinvent itself?

Build-to-order also requires the on-the-spot co-operation of component suppliers. Dell literally has suppliers’ stores at its factory door, but Apple may not be big enough to make that happen overnight.

On the other hand, the new G3 line of Macs announced last week — initially the only ones available built-to-order — are ideally suited to the strategy. Base machines can be quickly and easily configured with a range of “personality cards”, and as the first Apple machines to go out with the PowerPC 750 processor, they’re extremely fast and reasonably priced. It’s reasonable to assume that, quite soon, all Macs will look like this.

The Internet-based Apple Store as it was launched last week can sell to anyone — but it will only deliver in the US. Indeed, it has been created to address the highly competitive US market, especially in the education sector, where, for example, Intel has been offering large “research grants” to universities which standardise on Windows machines.

The story is somewhat different in other regions, including Asia-Pacific, where Apple distributors already sell direct to education, and where the retail environment is quite different. Apple New Zealand already configures high-end Macs after they land here, adding Zip drives or extra memory at the request of customers.

There was some excitement recently when Asia-Pacific chief Steve Vamos appeared to suggest that Apple’s Singapore manufacturing plant would shift to build-to-order. But what he actually said was that it could, if required. That doesn’t mean it will any time soon.

Like Compaq here, Apple New Zealand would be obliged to somewhow include its channel in any Internet direct selling. Unlike Compaq, Apple has a brilliant solution to offer those resellers if they want to do so themselves.

The new Internet Apple Store is powered by WebObjects, the technology Apple acquired when it bought Next Software at the beginning of the year; and (much to Microsoft’s chagrin), the foundation of Dell’s phenomenal Web site. WebObjects has the potential to become a powerful branding technology for Apple - and getting it out there selling Macs is a good start.

Other solutions - such as the new Apple Centre chain, which now numbers more than 50 shops (many of them single-brand) in Australia and three test outlets in this country - will be developed in response to local needs.

Indeed, the most important aspect for Apple’s foreign distributors of last week’s announcements is not to do with their own sales, but with how Apple fares in its home market. All the good work on operating expenses and inventory, and all the magic conjured by Steve Jobs will mean little if the company cannot return to profitability soon. And to do that, it has to sell computers in the United States.

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